NAV and Investment Update

RNS Number : 1782Z

Sequoia Economic Infra Inc Fd Ld

16 May 2019

 

16 May 2019

Sequoia Economic Infrastructure Income Fund Limited

("SEQI" or the "Company")

Net Asset Value as at 30 April 2019 and Investment Update

The NAV for SEQI, the specialist investor in economic infrastructure debt, increased to 102.62p from the prior month's NAV of 101.91p per share (being the 31 March cum-income NAV of 103.41 less the dividend of 1.5 pence per share declared in respect of the quarter ended 31 March 2019). The changes in NAV arose primarily through:

·      Interest income net of expenses of 0.72p; and

·      A combined decrease of -0.01p in asset valuations and FX movements.

As at 30 April 2019, the Company had cash of £25.5m and outstanding drawings on its Revolving Credit Facility of £113.9m, resulting in net leverage of £88.4m. The Company also had undrawn commitments, and one additional investment in settlement, collectively valued at £84.2m. On 14 May 2019, the Company announced the successful close of an additional £50m accordion tranche of its Revolving Credit Facility, increasing the maximum facility amount to £200m.

As at 30 April 2019, the Company's invested portfolio comprised of 50 private debt investments and 21 infrastructure bonds across 8 sectors and 26 sub-sectors and had an annualised yield-to-maturity (or yield-to-worst in the case of callable bonds) of 8.6% and a weighted average life of approximately 4.3 years. Private debt investments represented 84.9% of the total portfolio and 69.1% of the portfolio comprised floating rate assets. The weighted average purchase price of the Company's investments was 94.8% of par. Investments which are pre-operational represented 17.7% of total assets.

The Company's invested portfolio remains geographically diverse with 47% located across the US, 18% in the UK, 26% in Europe, and 9% in Australia/New Zealand. Currently the Company is not investing in Portugal or Italy but has invested in selective opportunities in Spain. The Company's pipeline of economic infrastructure debt investments remains strong and is diversified by sector, sub-sector, and jurisdiction. The Investment Advisor is using current market conditions to position the portfolio more defensively and with a higher credit quality which it aims to achieve over time.

As at 30 April 2019, approximately 99% of the Company's NAV consisted of either Sterling assets or was hedged into Sterling. The Company has adequate resources to cover the cash costs associated with its hedging activities.

The Company's settled investment activities during April include:

·      A $15.0m combined secondary acquisition of NewCold USA's Burley and Tacoma mezzanine loans, fully automated cold storage facilities with anchor tenants on long-term contracts.

·      An additional €6.7m secondary acquisition of term loans to Warnow Tunnel, a tolled tunnel in Rostock, Germany;

·      An additional $5.0m secondary loan acquisition to Terra-Gen, a renewable energy company;

·      An additional €5.0m secondary bond purchase of Naviera Armas SA's variable rate 2023 bonds;

·      An additional €2.0m secondary bond purchase of Naviera Armas SA's variable rate 2024 bonds; and

·      An additional €2.4m secondary bond purchase of Teekay Shuttle Tankers' 7.125% 2022 bonds.

No investments were prepaid or sold during April.

The Company also announced on 14 May 2019 that it is considering a further issue of equity to take advantage of a strong pipeline of investment opportunities. Further details of the possible equity issue will be announced in due course.

Ordinary Portfolio Summary (15 largest settled investments)

Investment name	Currency	Type	Ranking	Value £m(1)	Sector	Sub-sector	Yield to maturity / worst (%)
Hawaiki Mezzanine Loan	USD	Private	Mezz	56.2	TMT	Undersea cable	11.1
Salt Creek Midstream	USD	Private	Senior	52.9	Utility	Midstream	8.5
Tracy Hills TL 2025	USD	Private	Senior	46.0	Other	Residential infra	10.5
Scandlines Mezzanine 2032	EUR	Private	HoldCo	44.2	Transport	Ferries	6.1
Bannister Senior Secured	GBP	Private	Senior	42.1	Accomm.	Health care	8.0
Adani Abbot HoldCo 2021	AUD	Private	HoldCo	40.5	Transport	Port	9.5
Kaveh Senior Secured TL 2021	USD	Private	Senior	38.3	TMT	Data centers	8.2
Whittle Schools B	USD	Private	Senior	36.1	Other	Private schools	11.1
Bizkaia TL 2021	EUR	Private	HoldCo	35.4	Power	Electricity gen.	7.7
Bulb Senior TL 2021	GBP	Private	Senior	35.0	Utility	Electricity supply	7.2
Aquaventure	USD	Private	Senior	34.5	Utility	Water	8.1
Project Warsaw	EUR	Private	Senior	30.8	Renewables	Solar & wind	5.9
Seaport TL B	USD	Private	Senior	30.7	Transport	Port	8.0
Sunrun Hera 2017-B	USD	Private	Mezz	30.3	Renewables	Solar & wind	8.1
Sacramento Data Centre	USD	Private	Senior	29.2	TMT	Data centers	11.0

Note (1) - excluding accrued interest

Market Summary

A total of 33 project finance transactions closed in April throughout the Company's eligible jurisdictions, worth $6.7bn in aggregate. Notable transactions during the month include:

·      A $1bn financing of the development of the Indeck Niles CCGT Facility in Michigan, US; and

·      A CAD $663m financing of the construction of the extension to Ottawa's LRT Trillium Line in Canada.

The US economy added 263,000 jobs in April 2019, with the unemployment rate at 3.6%. The economy has added jobs for 103 months in a row, the longest period of sustained job creation since records began.

The Eurozone economic numbers are more positive for Q1 2019, with Italy emerging from recession with growth of 0.2%, France with growth of 0.3%, and Spain posting 0.7% growth. Overall, Eurozone GDP growth was 0.4%, the highest it had been since Q2 2018.

The UK economy remains heavily impacted by Brexit. The UK's exit from the EU has been pushed back to a potential date of 31st October, which has had a positive impact on the UK's economic forecast. Expected growth for Q1 2019 has been revised upwards to 0.5% and expected growth for 2019 is now 1.6%, up from 1.2%.

The Company's monthly investor report and additional portfolio disclosure will be made available at http://www.seqifund.com/.

LEI: 2138006OW12FQHJ6PX91

For further information please contact:

Sequoia Investment Management Company                              [phone]

Steve Cook

Dolf Kohnhorst

Randall Sandstrom

Greg Taylor

Stifel Nicolaus Europe Limited                                                       [phone]

Neil Winward

Mark Bloomfield

Gaudi Le Roux

Tulchan Communications (Financial PR)                                    [phone]

James Macey White

Martin Pengelley

Elizabeth Snow   

Praxis Fund Services Limited (Company Secretary)               [phone]

Matt Falla                                                                                             

About Sequoia Economic Infrastructure Income Fund Limited

The Company seeks to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. The Company is advised by Sequoia Investment Management Company Limited.

 

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